Private equity firms target Australian industrial stocks

Private equity firms are increasingly targeting industrial companies on the Australian Securities Exchange (ASX), signaling a shift in the market landscape. Sweden-based EQT has made a $9.4 billion bid for Cleanaway, while Canada’s Brookfield has proposed a $4.1 billion deal for Reliance Worldwide.

Recent developments have reached critical stages for both companies. Cleanaway’s nine-week exclusive due-diligence period with EQT concluded, opening the door for other potential bidders. Similarly, Brookfield’s exclusivity period for Reliance Worldwide has ended, necessitating a decision on a binding offer.

In the case of Reliance Worldwide, the pension fund AustralianSuper increased its stake from 10.4 per cent to 15 per cent, leading to speculation regarding competing bids. While Reliance shares trade 10 per cent below Brookfield’s offer, Cleanaway shares trade 18 per cent below EQT’s indicative offer. Analysts suggest these moves reflect firms acquiring businesses during periods of peak vulnerability due to depressed public valuations.